City housing worker fired funds missing

$100,000 vanished over several years, Henson says

FBI, HUD investigating

Internal review followed tip from 'outside source'

November 14, 1996|By Kate Shatzkin | Kate Shatzkin,SUN STAFF Sun staff writers Jim Haner and John O'Donnell contributed to this article.

A longtime employee of Baltimore's Housing Authority has been fired after an internal investigation found more than $100,000 is missing from the agency's operating fund.

Doretha McFadden, who worked in the disbursement department paying bills for the authority, was terminated shortly after the shortage was discovered several weeks ago, Daniel P. Henson III, executive director of the Housing Authority, confirmed yesterday. Henson said he had referred the matter to the state's attorney's office for investigation.

The disappearance of the money also is being investigated by FBI agents, said FBI spokesman Larry K. Foust. Several authority employees told The Sun that they had been interviewed by FBI agents about the financial irregularities. Foust would not say how many employees were being investigated. Officials at the U.S. Department of Housing and Urban Development also are investigating, sources said.

Henson declined to say how the money might have disappeared, referring such questions to prosecutors. State's Attorney Patricia C. Jessamy did not return a phone call about the case yesterday.

Henson said the funds appeared to have disappeared over several years, escaping the notice of outside and internal auditors who have reviewed the authority's finances.

Reached at her home yesterday, McFadden, 45, disputed the amount Henson said was missing. "Oh God, no. $100,000?" she said when told the amount. "It wasn't $100,000."

McFadden, who was being paid $43,335 a year, said officials fired her "out of the blue" Oct. 22 and told her she was being investigated. She said she had not been contacted by prosecutors. "My thing was not to hurt the authority or anyone else," she said, declining to elaborate before speaking to a lawyer.

Henson said the investigation began when the agency received "an anonymous tip from an outside source" that prompted an internal financial review. He said the internal investigation was continuing and would not comment on whether other employees might be disciplined.

He has notified HUD and Mayor Kurt L. Schmoke about the missing money, Henson said.

"I don't think this is a wide-ranging issue, but apparently the procedures needed to be tightened and changed," he said. Of the missing money, Henson said, "I am confident we will be fully reimbursed." Third District City Councilwoman Joan Carter Conway, who recently questioned Henson about the firing and the missing funds, said she was satisfied that the commissioner had acted appropriately.

"I kind of heard the rumor," Conway said yesterday. "Commissioner Henson was benevolent enough to confirm the rumor was true."

Councilman Martin O'Malley, also of the 3rd District and DTC frequent critic of Henson, said the financial problems were not surprising given the commissioner's leadership style. "Since taking over leadership of the Housing Authority, Commissioner Henson has acted to break down internal controls," O'Malley said.

The missing money is the latest in a string of black marks for the Housing Authority, which has been under fire from federal officials for allegedly ignoring formal bidding procedures and violating federal regulations.

Last year, the federal government ordered the city to toss out its contract with the Nation of Islam Security Agency to patrol public high-rise housing projects. The city is appealing orders that it repay hundreds of thousands of dollars misspent on that contract and on its no-bid housing-repair program.

Six people involved in the no-bid program have been convicted of federal bribery charges. A grand jury investigation is continuing.

Pub Date: 11/14/96

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